EXAMPLE: Simon formed her gourmet catering business ten years ago as an SMLLC. Six years later, he elected to have it taxed as an S corporation. Last year the business did very well and he had a net profit of $100,000. He knows that other people doing the same kind of work normally earn $50,000-$60,000 per year. He also checked with some government websites and his accountant for additional confirmation that $60,000 is a reasonable salary. He then paid himself a salary for the year of $60,000 (making sure to have his SMLLC deduct employer taxes for Social Security and Medicare, and also making sure to pay his own share of those taxes on his personal tax return). Simon took the remaining $40,000 as a dividend—and didn't have to pay any employment taxes on that money.

S Corp Capital Gains: Everything You Need to Know

What is better for a consulting company S Corporation or LLC?

What entity is better for consulting purposes, Llc or S-Corp?

S Corp Basis

S Corp Basis Worksheet | UpCounsel 2021

Worksheet for Figuring a Shareholder’s Stock and Debt Basis

LLC owners may also be eligible for a new income tax deduction for pass-through entities established by the Tax Cuts and Jobs Act. Starting in 2018, the owner of a pass-through entity, including a single or multi-member LLC, can deduct for income tax purposes up to 20% of the net income from the entity.

tax cuts and jobs act

https://www.investopedia.com/taxes/trumps-tax-reform-plan-explained/

https://www.congress.gov/115/bills/hr1/BILLS-115hr1enr.pdf

https://www.irs.gov/tax-reform

https://www.congress.gov/bill/115th-congress/house-bill/1/text

401k, IRA, etc

https://www.irs.gov/retirement-plans/one-participant-401k-plans